Frayed Ends: Business, Economics, and Tax Policy 3.0

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

You've backtracked about as quickly as the Republicans over the Confederate Flag issue, but that's cool. Regardless your premise still makes little sense for most people. What you can afford to pay for a house is a function of your monthly income. Hence a lot of people with uneven incomes have trouble getting mortgages even if overall they make enough money in total for the year. Why? Because you can't skip a payment in months where you don't get paid a lot. So, the notion that you will receive some tax benefit the following April has little to no bearing on how much you can afford each month in the current year. What the credit does do is give people an incentive to buy instead of rent holding other costs even but the main driver on that is 99% supply and demand & jobs.

I didn't backtrack at all. You're reading into what I wrote what you want to read.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I didn't backtrack at all. You're reading into what I wrote what you want to read.

This. St. Clown is correct on this one. He may or may not be happy about me being the one to say that.

 

[ScoobyDoo]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The percentage is not based upon the amount of income generated (which sounds like what is trying to be emotionally argued, regardless of whether or not that is the true concept), but rather where the income is generated. Everyone has the same opportunity at it.

The rich are cleaning up because Capital is revered and labor is despised. And as long as the US policies are formulated that way the middle class and the poor are screwed.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The rich are cleaning up because Capital is revered and labor is despised. And as long as the US policies are formulated that way the middle class and the poor are screwed.

It takes capital to create anything in this world, including your "revered" jobs, which are a business expense. As mentioned before, said "capital reverence" only applies to long-term investments, which actually allows said creations to flourish. And for what it's worth, that policy was in place even during the Clinton era. If you don't have long term investments, you're not going to have jobs which are created by even small business owners that seek funding for their business.

And before you start in on how only certain people can participate, that is dead wrong in today's internet age. Crowd funding exists to fundraise, and it's not always in the form of donations. Granted, there are still some that require that you maintain some income minimums in order to participate because they don't want to deal with your credit worthiness on a case by case basis, or the minimum investment amount they require is quite high, but there are outlets that allow even a small investor to build capital and get to the same point as retirees, which BTW live only on capital.

 

[unofan]

You've backtracked about as quickly as the Republicans over the Confederate Flag issue, but that's cool. Regardless your premise still makes little sense for most people. What you can afford to pay for a house is a function of your monthly income. Hence a lot of people with uneven incomes have trouble getting mortgages even if overall they make enough money in total for the year. Why? Because you can't skip a payment in months where you don't get paid a lot. So, the notion that you will receive some tax benefit the following April has little to no bearing on how much you can afford each month in the current year. What the credit does do is give people an incentive to buy instead of rent holding other costs even but the main driver on that is 99% supply and demand & jobs.

You're wrong on this one. Every economist out there recognizes that the mortgage interest deduction affects the housing market by increasing demand. They only argue over how big that effect is.

 

[FreshFish]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Just change capital gains to regular income and uncap the payroll tax.

If you are going to change capital gains to regular income, don't you also have to eliminate the corporate income tax for consistency? Otherwise you are taxing shareholders twice, once on corporate income that could have been theirs instead, and again upon the sale of their ownership stake in the company.



and a portion of the payroll tax has already had the cap removed (for the Medicare tax portion). Not only that but the Medicare "payroll" tax has already been extended to apply to investment income as well.

For the Social Security portion of the payroll tax, does that mean you also uncap the income that is counted in the formula for social security retirement benefit? the cap on income subject to Social Security payroll tax is exactly the same cap on income that can be considered for accumulating credits toward one's retirement benefit.



Maybe we should go to the ultimate tax simplification form:
-- how much did you earn last year?
-- send it in.

 

[FreshFish]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The only thing the housing deduction did was to make it more expensive to purchase a house from a pricetag perspective. Realtors and mortgage companies lobbied for it because they had obvious monetary interests. Once the interest deductions were allowed, prices for housing jumped a couple percentage points, as did mortgage rates at the time. People purchasing their first homes at the time saw no significant difference in their overall housing expenditures, and the same goes for all subsequent first-timers. The only people who benefitted from the deduction were those who had existing mortgages at the time the deduction was enacted.

Deduction for mortgage interest is limited to interest "only" on the first $1 million of principal on multi-million dollar homes, and it is limited further to something like $100,000 over your current mortgage if you refinance and take cash out.

 

[Rover]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

You're wrong on this one. Every economist out there recognizes that the mortgage interest deduction affects the housing market by increasing demand. They only argue over how big that effect is.

Economists don't live in the real world, so I'm not too concerned with that. However, as I already wrote: "What the credit does do is give people an incentive to buy instead of rent holding other costs even but the main driver on that is 99% supply and demand & jobs."

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Economists don't live in the real world, so I'm not too concerned with that. However, as I already wrote: "What the credit does do is give people an incentive to buy instead of rent holding other costs even but the main driver on that is 99% supply and demand & jobs."

If you're "giving people an incentive to buy", then you increasing at least the quantity demanded, but since the supply is not changing, you are in fact increasing the demand. The only time supply changes is when said growth results in someone purchasing land and building a house upon it, but unimproved land itself is able to be mortgaged, and unless you start sub-dividing, supply isn't going to change.

Also, jobs are not a main driver for purchasing a house on its own. It is true that employment will result in the filling of some form of domicile, but it is not limited to a house. For example, when I graduated college and moved here, I moved into a flat, not a house.

 

[Rover]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

If you're "giving people an incentive to buy", then you increasing at least the quantity demanded, but since the supply is not changing, you are in fact increasing the demand. The only time supply changes is when said growth results in someone purchasing land and building a house upon it, but unimproved land itself is able to be mortgaged, and unless you start sub-dividing, supply isn't going to change.

You are familiar with the concept of condo complexes, right? There aren't a lot of single family homes going up in Manhatten for example.

 

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

If you're "giving people an incentive to buy", then you increasing at least the quantity demanded, but since the supply is not changing, you are in fact increasing the demand. The only time supply changes is when said growth results in someone purchasing land and building a house upon it, but unimproved land itself is able to be mortgaged, and unless you start sub-dividing, supply isn't going to change.

Also, jobs are not a main driver for purchasing a house on its own. It is true that employment will result in the filling of some form of domicile, but it is not limited to a house. For example, when I graduated college and moved here, I moved into a flat, not a house.

Or, since you live in the United States, you moved into an apartment.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Or, since you live in the United States, you moved into an apartment.

It's faster to type flat.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

You are familiar with the concept of condo complexes, right? There aren't a lot of single family homes going up in Manhatten for example.

It's still a form of sub-division, as far as I can tell.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Good piece by Krugman on the economic legacy of slavery. Despite being NYT it's not behind a paywall.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Prices at Hannaford and Giant are going up. http://www.nytimes.com/2015/06/25/business/dealbook/supermarkets-ahold-delhaize.html

 

[5mn_Major]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Good piece by Krugman on the economic legacy of slavery. Despite being NYT it's not behind a paywall.

Interesting premise...that states are purposefully refusing benefits for their populous due to the fact they benefit minorities (and therefore is racism). Although the racism does exist in some forms, I'm not sure if this logic is solid. I know Walker and other GOP led states have turned down mass transit monies. The alternative suggestion is that they are trying to limit the size of government...and feel an obligation to turn down funds to further that end, based on principal, and the political need to stay consistent. Of course in doing so, they continually suboptimize their state, but it may not necessarily be due to racism.

 

[FreshFish]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Interesting premise...that states are purposefully refusing benefits for their populous due to the fact they benefit minorities (and therefore is racism). Although the racism does exist in some forms, I'm not sure if this logic is solid. I know Walker and other GOP led states have turned down mass transit monies. The alternative suggestion is that they are trying to limit the size of government...and feel an obligation to turn down funds to further that end, based on principal, and the political need to stay consistent. Of course in doing so, they continually suboptimize their state, but it may not necessarily be due to racism.

Another situation that frequently occurs is that the feds offer funding to the states up to $x dollars for y years, and then the state is on the hook financially for any costs above $x dollars during those y years, and 100% after the end of the y-year period.

That scenario was part of the 7 - 2 ruling against the government last year in NFIB vs Sebelius that overturned the Medicaid expansion part of the law. The law originally said that in order to get any Medicaid funds at all, the state had to accept the Medicaid expansion provision, or else be cut off entirely. That was overturned as "undue coercion" and replaced it with an option for the states, either they could accept the Medicaid expansion or turn it down, but either way, existing Medicaid funding had to continue as before.

Several governors turned down the Medicaid expansion funds because they did not like the loss of control over their own budgets that it would entail. That Medicaid expansion money was temporary funding only; once it ran out the states were on their own.

 

[FreshFish]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Another point that 5mn_Major alluded to, indirectly, in his earlier post:

The competition between states to attract / retain residents and businesses seems to be heating up. Recently the governor of CT proposed higher corporate income taxes, and three major employers said that if those corporate tax increases became law, they'd have to seriously think about leaving. A few days later, the state of IN ran a full-page ad in the WSJ inviting those three employers to relocate to Indiana. Those tax increases didn't become law.

I also recall about ten years ago, when NY state was proposing increase to individual income tax rates, the then-governor of CT, Jodi Rell, had a luncheon in Greenwich and invited most of the big NYC hedge fund managers to relocate to CT for its lower income tax rates (two rate increases ago...).

It may be the case that some states just cannot afford to lose more of their existing revenue base and are forced to keep spending in check because of those limitations on revenues.....most states are required by their constitution to have a balanced budget every year, they cannot run deficits like the feds do. State bond issues generally are tied to specific capital projects and sometimes even have dedicated revenue streams to service the annual interest payments.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Another situation that frequently occurs is that the feds offer funding to the states up to $x dollars for y years, and then the state is on the hook financially for any costs above $x dollars during those y years, and 100% after the end of the y-year period.

That scenario was part of the 7 - 2 ruling against the government last year in NFIB vs Sebelius that overturned the Medicaid expansion part of the law. The law originally said that in order to get any Medicaid funds at all, the state had to accept the Medicaid expansion provision, or else be cut off entirely. That was overturned as "undue coercion" and replaced it with an option for the states, either they could accept the Medicaid expansion or turn it down, but either way, existing Medicaid funding had to continue as before.

Several governors turned down the Medicaid expansion funds because they did not like the loss of control over their own budgets that it would entail. That Medicaid expansion money was temporary funding only; once it ran out the states were on their own.

If this were 30 years ago, it would have gone the other way. Look at how "undue coercion" affected both speed limits and the alcohol age.

 

[5mn_Major]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Another point that 5mn_Major alluded to, indirectly, in his earlier post:

The competition between states to attract / retain residents and businesses seems to be heating up.

Yeah. Its very likely that Wisconsin with Walker leading the charge is kind of heading off into uncharted territory. Wisconsin is starting to represent an alternative model to that of both Illinois and Minnesota. Not a good one...but a different one.